The European Central Bank has lowered its key interest rate again. The increase in the money supply will accelerate again. A good omen for bitcoin.
Rates continue to fall
The ECB has lowered its key interest rate again after an initial easing in June. It now stands at 4%, compared to 4.25% previously.
Markets expect the Fed to do the same next week, as the Fed chairman suggested in his Jackson Hole speech.
Christine Lagarde said the ECB expects inflation to average 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026. That's almost 7% in total.
This would be better than the 17% cumulative inflation of the last three years in the eurozone. And almost 20% for the EU as a whole.
Here are the inflation figures for France. In red is the “official” overall inflation… In blue is the energy inflation and in green is the food inflation:
If inflation seems to be subdued (for the moment…), we should not provoke a recession either. Nor a slippage of public finances, hence the drop in rates.
Indeed, the bill is steep for governments. France, for example, borrowed on average at 3.15% in 2023. That is much more than in 2022 (1%), not to mention 2021, when the country borrowed for free.
But the French debt is not small. It exceeds 3,100 billion euros, or 110% of GDP. So much so that the interests now amount to 70 billion euros per year. Less in reality since the ECB holds about 25% of European debt (~25% of the interest is therefore paid back to the States).
The fact remains that we are talking about tens of billions. We pay more in interest than we do for education or defense. Interest alone swallows up all the income tax revenue.
Since 1974, interest has been responsible for 53% of France's accumulated public debt. This 53% is represented by the blue curve on this graph:
PONZINOMICS
These interests are why the fiat system is a ponzi. We borrow to repay. In short, we accumulate interest on interest, which is a mathematically exponential process.
Let's repeat it. The fiat system is a ponzi. Every penny in circulation (dollar, euro, yuan, etc.) comes from a debt that is waiting to be repaid against interest. This is why the quantity of money in circulation MUST increase and will continue to increase.
The consequence is the loss of purchasing power of fiat currency. The dollar has lost 97% of its purchasing power since 1913. It is 40% for the euro since the year 2000.
The fall in rates means that the growth of total debt (households and businesses) and therefore of the quantity of money in circulation will resume.
And since we are reaching the physical limits of growth (peak oil), this currency is preparing the ground for the next inflationary crisis. Our article on the subject: âIs Bitcoin Really Magicâ?
All this to say that you should not keep your long-term savings in a bank account. You should invest them in something safe. And nothing is safer than the limited money supply of 21 million bitcoins.
And don't count on retirement. Italy and Germany are already whispering 70 years…
âBut bitcoin is too volatileâyou say? Then read Michael Saylor's crystal clear answer.
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